Why unlimited holidays mean more time in the office

Published: 12 March 2019
By Pilita Clark

Unlimited vacation policies: “It is hard to think of another work perk that promises so much and delivers so little – to workers.”

Whenever I get an email from LinkedIn telling me about all the new jobs I could apply for, I usually click delete. But last week, desperate to put off filling in a long tax form, I started trawling through the site’s latest job openings, and discovered something disturbing. One of the most annoying fads to come out of Silicon Valley in the past few years – the unlimited vacation policy – has spread.

It does not seem that long ago that boundless time off was a novelty promised by the likes of Netflix, LinkedIn itself and Virgin’s Richard Branson, who said he had got the idea from Netflix. Now it is being offered by law firms in London, loan companies in Latvia, recruiters in Berlin and electronics outfits in Taipei. “Work hard and take time off when you need it,” chirped a typical advert I spotted from Taiwan’s Tomofun, a company that makes a camera for watching housebound pets from your desk.

Savings

The contagion is no real surprise. It is hard to think of another work perk that promises so much and delivers so little – to workers. It is a different story for companies. A big firm that ditches fixed paid leave for open vacations can wipe millions of dollars worth of unused leave liabilities from its books that would otherwise be paid to departing employees. At the same time, it can safely offer bottomless holidays knowing most employees will never take them, especially in the United States, the only major advanced economy in the world that does not guarantee workers paid vacation time.

American workers took an average of 16.8 vacation days last year, according to one report I read recently, and often fail to use up all their leave, largely because they “fear returning to a mountain of work”. In Europe, where workers are guaranteed at least four weeks’ paid leave, the thought of this American import creeping into more and more offices is awful.

Some companies are doing better at using open holiday schemes to make their workers less exhausted.

I can think of one or two people who would charge off for six weeks in Goa if they could. But I know more who would feel too pressured to try it, especially if they had to justify time off that was once ordained. Sure enough, evidence is already rolling in showing that people end up taking fewer days off at companies that have abandoned firm rules on holidays in favour of open schemes.

After speaking to several people last week who work for US companies with unlimited vacations, I can see why. Most worked at tech start-ups and were happy enough with the policy. But the story that sticks in my mind came from a woman who was initially thrilled to be able to take two weeks off for her honeymoon this year.

The trouble was, she had been invited to a wedding abroad early next year and did not think she could go because she felt “too nervous” about asking for another week off. So much for unlimited leave.

The interesting thing is that she was thinking of switching jobs and did not want to go back to a job with the traditional two weeks of paid vacation a year.

Kronos software group

That underlines something that I had not thought about before: some companies are doing better at using open holiday schemes to make their workers less exhausted, happier and potentially more productive. But they probably have to be run by people such as Aron Ain, chief executive of the Kronos management software group. He decided to introduce open vacations at the beginning of 2016, after struggling to recruit workers. But he did not do it willy-nilly, as he explains in this month’s Harvard Business Review.

He decided to return any savings to employees, by boosting maternity leave and other benefits. He used a consultant to figure out pitfalls, such as people being afraid to ask for too much time off. He also tried to sidestep such problems by insisting employee leave was tracked to make sure managers were handling leave requests fairly.

The result: employees took off an average 2.6 more days last year than in 2015. Voluntary turnover dropped. Workers said they were happier and Ain thinks it is no coincidence that 2016 was Kronos’s best financial year ever.

I am not sure about that link but I have revised my opinion. I can see that there are upsides to unlimited vacations, but only at companies with an unlimited commitment to making sure that they actually work. – (Copyright The Financial Times Limited 2017)